This arrived in one of my E-mails.
Govts Can Exit A400 Million Program If Milestone Missed
February 10, 2009: 10:44 AM ET
(Adds detail.)
By David Pearson
Of DOW JONES NEWSWIRES
PARIS -(Dow Jones)- European governments that have ordered the Airbus A400M
military transport aircraft may get their planes more than four years late,
but could back out of the deal in coming months, French lawmakers said
Tuesday.
Development of the A400M, designed to be the replacement for an existing
fleet of tactical and strategic cargo planes in service with the air forces
of seven European nations, is running two years late and has led to cost
overruns of more than EUR1.7 billion.
EADS Tuesday said that it remained committed to delivering on the A400M
program, and said it's not able to provide a figure for cost overruns.
The program is ambitious: European Aeronautic Defence & Space Co. NV
(5730.FR) took on a highly complex project that required the development of
a new airframe, a new turboprop engine - the world's biggest - and filling
it with state-of-the art electronic systems.
But it has been plagued with technical and organizational difficulties.
Critics have argued it would be cheaper to scrap the program entirely, Jean-
Pierre Masseret, a French senator, told a press conference.
But another senator, Jacques Gautier, said that would have "catastrophic"
consequences for aerospace jobs in Europe and for the credibility of
European governments in their ability to manage a pan-European defense
program.
The lawmakers Tuesday presented a report highlighting the problems facing
the program, but also urged governments to persevere, arguing that the cost
of dropping it would be too high.
Masseret said that the terms of the initial contract signed between the
customer governments and EADS contains a release clause that allows the
governments to pull out if the plane hasn't flown 14 months after a
milestone stipulated in the contract.
The two French lawmakers said EADS had planned to have the plane in the air
at the beginning of 2008, and that the 14-month period will end in a few
months.
The governments can pull out without penalties and seek reimbursement of
advances, they said. Governments have already poured EUR5.2 billion into the
program, Masseret said, and France has put up more than a quarter of that
amount.
EADS is trying to renegotiate the terms of its contract with OCCAR, the body
that represents the buyers, and has said it can't give a date for the
plane's first flight until these talks are completed at the end of February.
The European governments that have ordered 180 aircraft are exasperated by
the A400M program delays, as the plane was supposed to fill urgent capacity
needs, and they must now keep existing fleets beyond their expected lives.
If the A400M program were scrapped, the report said the governments would
have to buy mixed fleets of Lockheed Martin Corp.'s (LMT) C130J Super
Hercules and Boeing Co.'s (BA) C17 transporters.
At the same time, the report said Europe's defense industry would lose its
know-how in building such aircraft for decades.
-By David Pearson, Dow Jones Newswires; +33140171740, david.pearson@
dowjones.com
(END) Dow Jones Newswires
02-10-09 1044ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Govts Can Exit A400 Million Program If Milestone Missed
February 10, 2009: 10:44 AM ET
(Adds detail.)
By David Pearson
Of DOW JONES NEWSWIRES
PARIS -(Dow Jones)- European governments that have ordered the Airbus A400M
military transport aircraft may get their planes more than four years late,
but could back out of the deal in coming months, French lawmakers said
Tuesday.
Development of the A400M, designed to be the replacement for an existing
fleet of tactical and strategic cargo planes in service with the air forces
of seven European nations, is running two years late and has led to cost
overruns of more than EUR1.7 billion.
EADS Tuesday said that it remained committed to delivering on the A400M
program, and said it's not able to provide a figure for cost overruns.
The program is ambitious: European Aeronautic Defence & Space Co. NV
(5730.FR) took on a highly complex project that required the development of
a new airframe, a new turboprop engine - the world's biggest - and filling
it with state-of-the art electronic systems.
But it has been plagued with technical and organizational difficulties.
Critics have argued it would be cheaper to scrap the program entirely, Jean-
Pierre Masseret, a French senator, told a press conference.
But another senator, Jacques Gautier, said that would have "catastrophic"
consequences for aerospace jobs in Europe and for the credibility of
European governments in their ability to manage a pan-European defense
program.
The lawmakers Tuesday presented a report highlighting the problems facing
the program, but also urged governments to persevere, arguing that the cost
of dropping it would be too high.
Masseret said that the terms of the initial contract signed between the
customer governments and EADS contains a release clause that allows the
governments to pull out if the plane hasn't flown 14 months after a
milestone stipulated in the contract.
The two French lawmakers said EADS had planned to have the plane in the air
at the beginning of 2008, and that the 14-month period will end in a few
months.
The governments can pull out without penalties and seek reimbursement of
advances, they said. Governments have already poured EUR5.2 billion into the
program, Masseret said, and France has put up more than a quarter of that
amount.
EADS is trying to renegotiate the terms of its contract with OCCAR, the body
that represents the buyers, and has said it can't give a date for the
plane's first flight until these talks are completed at the end of February.
The European governments that have ordered 180 aircraft are exasperated by
the A400M program delays, as the plane was supposed to fill urgent capacity
needs, and they must now keep existing fleets beyond their expected lives.
If the A400M program were scrapped, the report said the governments would
have to buy mixed fleets of Lockheed Martin Corp.'s (LMT) C130J Super
Hercules and Boeing Co.'s (BA) C17 transporters.
At the same time, the report said Europe's defense industry would lose its
know-how in building such aircraft for decades.
-By David Pearson, Dow Jones Newswires; +33140171740, david.pearson@
dowjones.com
(END) Dow Jones Newswires
02-10-09 1044ET
Copyright (c) 2009 Dow Jones & Company, Inc.
